Vietnam’s National Assembly ratified the European Union-Vietnam Free Trade Agreement (EVFTA) and the EU-Vietnam Investment Protection Agreement (EVIPA) at its plenary session on Monday.
The assembly said the adoption of the trade and investment deals represents “great progress” in the relations between the EU and Vietnam on the 30th anniversary of diplomatic ties between the two sides.
Vietnam represents the second-largest exporter among the Association of Southeast Asian Nations (ASEAN) members to the EU. The European Parliament has already passed the pacts.
Under the agreement, Vietnam will cut 65 percent of import taxes on EU commodities, while the rest will be erased over a 10-year period. The EU will slash more than 70 percent of tariffs on Vietnam’s commodities after the deal takes effect, while the rest will be abolished over the next seven years.
The EVFTA, expected to take effect as early as July, is the EU’s second deal with a member of ASEAN after Singapore.
The World Bank said in May the EVFTA could boost Vietnam’s gross domestic product by 2.4 percent and exports by 12 percent by 2030 and lift hundreds of thousands of people out of poverty.
“One of the issues that attracted the attention of the National Assembly deputies was that Vietnam had to change its mode of economic activity, and secure customers in the European market after the COVID-19 pandemic,” the National Assembly News said on its website before the voting took place, according to Nikkei Asian Review. “Along with the benefits, the EVFTA also poses some challenges. The EVFTA creates competitive pressures on goods and services from the EU for Vietnamese businesses, goods and services.”
Already a key supplier of apparel and footwear to the EU and U.S., apparel and footwear exports are seen rising with the deal. Vietnam ranks as the world’s third-largest apparel exporter after China and Bangladesh.
Vietnam’s exports to the EU market reached $42 billion in 2019, while EU shipments to Vietnam totaled $15 billion, according to Vietnamese government data.